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Author: Nlmeem Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75793  
Subject: ETS PAYPHONES Date: 8/21/1999 1:34 AM
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Our financial advisor has suggested we invest in Payphones. It is a lease arrangement with a "guaranteed" return of 14%. Since our only income is Social Security (not very much) we are anxious to find out more about this company.

We thought perhaps other members of "Fools" had heard of this company. According to our advisor he, his family and many, many more people have made out very well investing in ETS. The annual return of 14% is guaranteed for 5 years also.

We are going to request copies of their financial reports, any other suggestions will be greatly appreciated.

Nancy

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Author: DowDanny Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13315 of 75793
Subject: Re: ETS PAYPHONES Date: 8/21/1999 2:38 AM
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> The annual return of 14% is guaranteed for 5 years also. <

I have NO IDEA at all about this investment, but I have a word of advice. Check out, in great detail,what exactly is meant by "guarenteed 14% return"

I find such wording extremely suspicious. Does the "14% return" that you receive include 'return of capital' - in other words, does the guarenteed 'dividend' actually have some chance to include pay back of your principle instead of true "net gain" ?

I ask because there are some 'income oriented' closed-end mutual funds that pay fixed "dividends" -but if the real income and net gains on the fund's investments don't meet the needs, then the fund merely makes up the difference by 'returning your capital' - paying back some principle. Awfully messy, tax wise, and not quite the same as a guarenteed "14% return".

OTOH, if there were some way to enforce the guarentee, then 14%/year for 5 years would more-or-less return your initial investment to you.

We are going to request copies of their financial reports


Can't think of a better place to start than there.

Don't turn over any money to anybody until you know all of the details, risks and contingencies.

Cheers -

- D


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Author: WilliamLipp Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13322 of 75793
Subject: Re: ETS PAYPHONES Date: 8/21/1999 12:36 PM
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Nlmeem Date: 8/21/99 1:34 AM Number: 13313
It is a lease arrangement with a "guaranteed" return of 14%. Since our only income is Social Security (not very much) ...

I know nothing of the company. But my father taught me that "if it sounds too good to be true, it probably is." This sounds like a scam to me. If they could really guarantee 14%, there are lots of ways to finance without going to people subsisting on Social Security. From another point of view, if 14% represents the "market rate" for their financing needs, this is "deep junk" with a large probability of going bankrupt. I'd stay far away from it, and the "financial advisor" that suggested it.


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Author: zgriner Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13323 of 75793
Subject: Re: ETS PAYPHONES Date: 8/21/1999 2:08 PM
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Since our only income is Social Security (not very much)
How are you going to pay for your lease then?

According to our advisor he, his family and many, many more people have made out very well investing in ETS.
How did find this 'advisor'? Why is he pushing payphones?

We thought perhaps other members of "Fools" had heard of this company.
Here is a link I found, http://www.etspayphones.com. It has an address, phone number, & email address you can use to get more info. It appears to be a private company, since I couldn't find any stock symbol for it.

Zev



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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13337 of 75793
Subject: Re: ETS PAYPHONES Date: 8/22/1999 7:50 PM
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<<Our financial advisor has suggested we invest in Payphones....The annual return of 14% is guaranteed for 5 years also.

We are going to request copies of their financial reports, any other suggestions will be greatly appreciated.>>


Here's my suggestion:
Run, do not walk, away from that financial advisor. Get your money and assets out of his hands tomorrow morning.

"Guaranteed"? By whom? Ask your F.A. if he is willing to give you a personal guarantee, backed up by some thing substantial like a trust deed on his house.
Wanna bet what his response to this will be?

What you have described sounds like an all-too-typical scam.

Good luck,
Ray


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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13338 of 75793
Subject: Re: ETS PAYPHONES Date: 8/22/1999 7:57 PM
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<<Here is a link I found, http://www.etspayphones.com. >>

Oh-- YUCH!!! The Chicago Tribune recently ran a series of articles about scams & frauds. One of the very common one was the "buy your own ______ vending machine and get rich from people shoving money into it." They interviewed a number of too-late-wise investors. Seems the only people making were the companies selling the machines to the gullible.

And, yes, pay phones were one of the vending machines.

Ray

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13355 of 75793
Subject: Re: ETS PAYPHONES Date: 8/23/1999 11:24 AM
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There are listed on the New York Stock Exchange a group of high yield investments known as trusts or partnerships. Many pay high yields--10 to 20%. I suspect Payphones is one of these.

The trick that makes the high yield possible is that instead of owning a portion of the asset, you own only the rights to the income from the asset for a fixed time frame.

Experience with this kind of investment is that they are very high risk. Some do consistently pay high dividends and if you successfully hold them long enough and then sell at the right time you can get excellent yields.

However, at least half do not perform as expected. Then the share value drops suddenly and because you own no real assets, the propects of recovery is low.

It is easy to lose your investment with these vehicles. They are not recommended, especially for the retired.

An absolute must is read about them in the Standard and Poors reports (available in most libraries) before you buy. Many have trap doors and booby traps (like guaranteed dividends for x years) that can make for nasty surprises. Expiration dates, and conversion rights to other entities can also be important.

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Author: telegraph Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13441 of 75793
Subject: Re: ETS PAYPHONES Date: 8/25/1999 12:02 PM
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You should immediately fire any financial advisor who recommends you invest in Payphones that pay 14%!.

There is no free lunch - guaranteed 14%? - heck, if this was the case, everyone else would have already bought all of the availabe investments, leaving you with no opportunity to buy them. The only thing you buy with 14% guaranteed return is extremely high risk. Junk bonds pay 8-15% exactly because they are that - and likely to fail, leaving you with nothing.

Would you buy these if there was a 50/50 chance of losing everything? That is what the 14% interest is telling you - you can buy 100% guaranteed CDs paying about 7% now. Or you can buy some 14% investments with 50% chance of 14% return, 50% chance of zero return. That averages out to 7% return. I'd sleep a lot better knowing I have a 100% chance of getting my money back.

Only if you bought many 14% investments (to spread the risk - needing about 20 different ones), would you even think of taking on this much risk. And you aren't even getting a 'premium' for the risk you are taking. If interest rates rise, your principal may drop.

Run, as fast as you can, to another financial advisor!

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Author: rem50 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13516 of 75793
Subject: Re: ETS PAYPHONES Date: 8/27/1999 9:42 PM
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Have you found out if your return is only from the
actual deposits to the phones??? What about the huge increase in the use of calling cards and credit card calls...what about collect calls??? Do you get a piece
of the whole pie, or just nickles and dimes?
Maybe these are like those strange phones you see at the mall and use to call home, only to find out the call costs $12 bucks..there is a lot of pressure on the gov't to
reign in some of these companies...you're supposed to lower the risk of your investments as you get older, not increase it. Good Luck

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